The Graph Above Shows the Demand and Cost Conditions Facing

question 95

Multiple Choice

The graph above shows the demand and cost conditions facing a monopolist.What price will the monopolist set?

• A)$20
• B)$30
• C)$40
• D)$50
• E)$60

---

Definitions:

Perfect Substitutes

Goods or services that can be used in exactly the same way, thus one can completely replace another in consumption.

Marginal Rate of Substitution

The speed at which a consumer is prepared to exchange one product for another while keeping their overall satisfaction constant.

Utility Maximizing

The process or behavior of consumers attempting to get the greatest amount of satisfaction from their consumption choices, subject to their income and the prices of goods and services.

Consumption Map

A graphical representation showing different combinations of goods or services that provide equal satisfaction or utility to a consumer.